Implementation of Canadian Loss Experience Automobile Rating (CLEAR) system



No. A-14/95
- Auto
Property & Casualty

To the attention of all insurance companies licensed
to transact automobile insurance in Ontario

The Ontario Insurance Commission (OIC) is enclosing a rate filing package entitled
"Simplified Filing Guidelines for Proposed Revisions to Automobile Insurance Rates for CLEAR" (Canadian Loss Experience Automobile Rating).  The OIC must approve your rate filing before you implement the CLEAR system.

CLEAR uses actual claims experience for each vehicle make and model for setting insurance rates for private passenger vehicles.  Insurance companies should consider the CLEAR system in order to formulate insurance rates that are better aligned with the risks they undertake.

If implemented, CLEAR will enhance the reputation of the automobile insurance industry as being responsive to consumers needs.


Most insurance companies have been using vehicle rate groups based on the Manufacturer's Suggested Retail Price (MSRP) to determine their rates for private passenger automobile insurance.  Due to the concerns with inequities in the MSRP rate group system, the Vehicle Information Centre of Canada (VICC) developed the CLEAR system.

In March, 1994 the OIC approved the CLEAR methodology for assigning rate groups and differentials for direct compensation - property damage, collision and comprehensive coverages.  Subsequently, in March, 1995, the OIC approved the CLEAR methodology for assigning rate groups and differentials for accident benefits coverage.

Insurers obligations to implement CLEAR

Adoption of the CLEAR system is voluntary.  If implemented in accordance with the attached guidelines, the CLEAR system will be revenue neutral.  However, where an insurance company implements the CLEAR system, and adoption of the CLEAR rate group and differential would result in a significantly higher rate for a specific vehicle model, the company is required to phase in the rate group and differential.


If you have any questions on the enclosed CLEAR rate filing package, please contact your analyst in the Rates and Classifications Branch at the OIC.

If changes to rates, other than the adoption of CLEAR, are being proposed, the standard "Section 412 Filing Guidelines" must be used.

If you wish to obtain general information about the CLEAR system, please contact the Vehicle Information Centre of Canada at (905) 764-5560.

D. Blair Tully

August 11, 1995


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